A new Air DNA Outlook report says 2026 is shaping up to be the most compelling year to invest in short-term rentals since 2021.

I'm Kathy Fedke, and this is real estate news for investors.

This is Real Estate News with Kathy Fedke.

After several years of adjustment, the short-term rental market appears to be entering a more balanced phase.

Returns are improving, mortgage rates stabilizing, and demand is expected to recover in 2027.

In early 2025, demand continued the rebound we saw in 2024, but momentum slowed during the summer

travel season as economic uncertainty weighed on consumers.

Stronger holiday performance later in the year helped offset that softness.

As a result, AirDNA noted that average occupancy in 2025 finished slightly higher than 2024.

Nightly rates known as ADR have also resumed growth after stagnating in 2023.

Rates dipped slightly in the third quarter of 2025, but holiday travel helped restart an upward trend.

One important metric in the report is the STR premium. That's the

difference between expected monthly short-term rental income and the monthly mortgage payment on a

newly purchased property. During the post-pandemic boom, that premium soared. It later shrank as

mortgage rates climbed and competition increased. But by late 2025, the STR premium had rebounded to $989 per month.

That's the highest level since late 2022, and more than three times the low of $277 seen in October of 2023.

AirDNA expects that premium to grow modestly through 2027.

However, supply tends to follow returns with a lag, even when returns improve.

It can take one to two years for investors to purchase, furnish, and list new properties.

Looking ahead, AirDNA forecast that supply growth

will accelerate in 2026, particularly in coastal and mountain lake resort markets. At the same time,

demand growth is expected to slow in 2026 before recovering in 2027 as economic conditions improve.

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